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utility regulation

Recently, there has been a sharp increase in the number of utilities proposing to increase mandatory monthly fixed charges for electricity. Utilities prefer fixed charges over usage charges, because fixed charges ensure a set amount of revenue each month, regardless of sales. However, higher fixed charges are an inequitable and inefficient means to address utility revenue concerns: they reduce customer control, disproportionately impact low-usage and low-income customers, dilute incentives for energy efficiency and distributed generation, and increase electric system costs.

The Oklahoma Corporation Commission denied last week the application of Oklahoma Gas and Electric (OG&E) to spend $1.1 billion on new capital projects—primarily coal plant retrofits to comply with federal environmental standards. The Commission’s decision casts the future of the 1,100 megawatt Sooner Generating Station into doubt.

Long used to encourage utilities to meet reliability, safety, and energy efficiency targets, performance incentive mechanisms are increasingly being used by regulators to address new challenges and opportunities facing the electric industry, ranging from smart grid adoption to clean energy goals.

The Kentucky Public Service Commission found in a November 14 order that two utilities in the state should commission a study that examines the potential benefits of industrial demand-side management programs.